Concessionaires in Virginia City who operate in properties managed by the Montana Heritage Commission (MHC) have recently learned that the Department of Commerce (DOC) is planning to cancel their contracts and present new terms as part of their end of year review. For Kirk and Shauna Belding, who operate Bob’s Pizza, the cancellation comes five years into their second 20 year lease of the property. 

“I met on Wednesday, Nov. 26 with April Armstrong the acting Director (of the MHC), who brought Tanya Engle  MHC Director assistant,” explained Kirk Belding. “I was hoping to show April around the restaurant and give her some background of how Bob’s Place got its start and why it continues to grow. Within the first few minutes of meeting, she said the new lease is non-negotiable and I would be receiving it on December 15th and have 21 days to accept or decline it.”

“After learning this, I was devastated,” he continued. “I have invested 28 years of my life into creating Bob's Place. I feel undervalued and unappreciated and not sure what to do next. From 28 years to 21 days to make a decision.” 

“The existing contracts generally allow for review each December based on market conditions and increased rents in any event,” explained Montana Department of Commerce chief marketing officer Mitch Staley in an interview with The Madisonian. “Existing contracts are being terminated because they contain significant out of date terms and conditions and this is not fair to other lessees. The new contracts will include uniform terms and conditions and also rents that are in line with other similarly situated lessees. The Montana Heritage Commission is able to terminate contracts at any time with specific timeframe given to the vendor.”

“We do not have the new lease that MHC is proposing,” said Belding. “I was told Bob’s would be getting a five year lease, even though there is 15 years left in the current lease, and rent will be 15% of gross revenue, which is five times the amount we are currently paying in rent. This new lease will make it impossible to stay in business. Our family business which our son helps run, no longer seems to have much of a future with these abrupt financial changes.”

Belding’s current lease is a flat rate with a three percent annual cost of living increase. 

The rumors about the new leases have caused concerns for more than just the Beldings. Jason Lange, who runs the Wells Fargo Steakhouse was informed in August about the coming increase in rent. 

“The only detail I have is the increase to 15% of gross sales,” he explained. “I still have not been notified when my lease will be canceled. This change was verbally given to me around the end of August by the then director Kal Poole. This has a large impact on my business as with the uncertainty of the current situation I can't book events for next year which I have had numerous people wanting to book for 2026 and 2027.”

The MHC was created in 1997 to manage historic properties owned by the state of Montana that include those purchased from the Bovey family in Virginia and Nevada City. The purpose of the commission as defined by the legislation is to  “manage, on behalf of the state, properties that possess outstanding historical value, display exceptional qualities worth preserving, and are genuinely representative of the state's culture and history,” according to Montana Code Annotated 22-3-1001. “The Montana heritage preservation and development commission shall achieve this purpose by managing the properties for which it is responsible in a manner that protects the properties and encourages economic stability,” continues the statute. 

Staley points out that the MHC also has a requirement to generate revenue from the properties. 

“MHC is statutorily required to earn revenue,” he explained. “Specifically, MHC's budget authority includes 44% of earned revenue.” 

According to Staley, the new contracts will correct situations that are causing the MHC to lose money on contracts.

“Under the status quo, several concessionaire contracts are causing MHC to lose money, which then impacts MHC and Commerce's ability to meet requirements, including preservation and development. These new contracts ensure both continuity between like contracts and ensure that MHC is not subsidizing concessionaire businesses by losing money on them,” he said. 

The new lease agreements will vary based on the type of business and provisions provided by the MHC, according to Staley. 

“The work the Montana Heritage Commission and the Montana Department of Commerce are doing is to standardize contracts based on their usage. Some of the contracts will be at 15% of gross revenue, others will be based on flat lease. This determination is made based on how much MHC has vested into each concessionaire. Examples include holding liquor licenses for the business to use, providing kitchen equipment, etc,” he explained. 

“This decision was made to ensure continuity between contracts. Commerce requested for this to occur last year during the same time. Unfortunately, this work did not occur. Commerce and MHC want to ensure that there is no perception of favoritism or preferential treatment. As written now, there are several contracts which provide preferential terms to concessionaires. MHC is statutorily required to earn revenue, up to 44% of their budget, and it cannot do this while losing money on some of the current concessionaire ventures,” concluded Staley. 

“If the option is take it or leave it, I can't accept those terms as my menu would be too expensive for most people,” said Lange. “I would have to pay the state to run the Wells Fargo Steakhouse.”

 Belding agrees with Lange’s assessment of the 15% gross revenue lease. 

“I have never heard of a restaurant surviving with a rent that is 15% of gross revenue,” he said. “I have a hard time imagining that any restaurant would move forward with this proposal for a lease on a seasonal restaurant.”

His concern extends past the walls of his pizzeria to the entire community of Virginia City. 

“The impact on Virginia city will be detrimental,” he said. “Bob’s Place is a huge draw for our town. We have visitors from the surrounding regions that come back here year after year, community members and tourists from all over the world that enjoy our homemade food from our family run business.” 

“We have employed hundreds of local kids over the years, especially for their first jobs and now I am employing their kids. This is a multigenerational Montana family run business that is in major jeopardy,” he concluded. 

More information about the MHC can be found at https://commerce.mt.gov/About/Boards/Montana-Heritage-Commission/